Chevron plugging offshore well in Brazil

Setback in offshore exploration effort after oil leak

SteveGelsi

NEW YORK (MarketWatch) -- Chevron said it’s plugging and sealing an appraisal well in a setback for its offshore Frade field in Brazil, after a leak of crude oil was discovered.

Chevron
CVX, -1.73%
said late Tuesday it would plug the well at a depth of nearly 1,200 meters about 230 miles off the coast of Rio De Janeiro in the oil-rich Campos Basin.

Frade Field off the coast of Brazil

Chevron said well-control operations have been successful and that any fluid flow from the well appears to have ceased.

“This is the first sign of progress in efforts to contain an oil spill,” analysts at Credit Suisse said in a note to clients on Wednesday.

Shares of Chevron edged up 0.1% on Wednesday, after falling 2.7% in the previous session. Transocean Ltd.
RIG, -0.88%
, the company which was drilling the appraisal well for Chevron, rose 2.6% on Wednesday.

The Brazilian government had estimated a leak rate of 200 to 330 barrels a day, with up to 882 barrels reaching the surface so far, according to reports.

Frade ranks among the largest deepwater heavy oil projects in the world and “one of our company’s biggest capital investments,” Chevron said on its corporate Web site. Chevron began production at the Frade field in 2009, with daily output now at around 80,000 barrels a day.

Over the weekend, Chevron said it was managing a fleet of 17 vessels with a presence in the Campos Basin to help control the oil sheen with containment booms, skimming and washing.

Although the leak is relatively small, it served as a scaled-down reminder of risks of oceanic oil exploration in the wake of the 2010 oil spill by BP PLC
BP, -1.72%
in the Gulf of Mexico.

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